UK investors are failing to position themselves for future stockmarket growth by remaining overweight cash and only allocating small amounts to higher-risk assets, research from Schroders suggests.
The asset managers’ Schroders Global Investment Trends Report shows UK investors are planning to increase the value of their investments by just 4 per cent over the coming 12 months, despite global stockmarket growth and historically low interest rates.
The research notes that if investors continue to draw-down savings to pay for rising living costs at the same 3.5 per cent they did last year, this will mean a net rise in investment value of only 0.5 per cent over the next year. This equates to just £50 of new money on a £10,000 investment portfolio.
UK investors remain overweight cash, despite forecasts that the FTSE 100 could triple in growth in the next 10 years, and plan to allocate only 12 per cent of new money to higher-risk assets such as equities in 2013. In contrast, some 50 per cent of new investments is likely to go into low-risk cash-based savings.
Schroders managing director for UK intermediary Robin Stoakley says: “While many in the UK continue to feel the squeeze and incomes are under pressure, we think investors must act to rebalance portfolios or risk missing an excellent opportunity to boost their wealth.
“The fact that UK investors still believe that low-risk assets like cash offer the best potential is staggering but does reflect the bruised confidence that still abounds as a result of the recession. However, markets are recovering fast and there is a risk that investors holding back will find they miss a bull-run.”